$1m paid for farmland vegetation sold for carbon credits

17th November 2006Increasing demand from industry is paving the way for the development of a major market in selling farming vegetation for carbon credits.

A deal approved on Tuesday will see development rights of undeveloped south-west Queensland farmland sold off as carbon credits to major industries.

For one landholder, this will result in a payment of close to $1 million.

To date, three landholders who have been engaged in negotiations for the past four months will soon sign over the management of selected areas of vegetation on their freehold land for a 121 year period.

In return, they have received payments of between two and three times the value of land in its undeveloped state.

The deal was brokered by Mark Jackson from the Lismore, NSW, based company Carbon Pool, and facilitated by Dominic Devine, from Devine Agribusiness, Charleville.

It was approved by the Commonwealth Government’s Australian Greenhouse Office.

The agreement is structured as a ‘profit a prende’, a proprietary right to take the produce or part of the soil from the land of another person, in this case carbon in trees that would otherwise be destroyed, in effect a carbon right.

The conditions of the agreements vary. Landholders can sell the rights to clear poplar box vegetation but still be able to fodder harvest the mulga trees located in the same area.

“This is an indication the payment works out roughly as a bit less than the improved value of the country,” Mr Jackson said.

“In effect, the agreement is in perpetuity to protect the trees which store the carbon.

“Industry – in this case the mines and energy sector – is buying these credits to offset its own carbon emissions.

“This is not about locking up land, it is about locking up carbon and landholders being paid for it.”

Under the arrangement with the Australian Greenhouse Office, the Carbon Pool company sells 80 percent of the credits to industry and retains 20pc as a buffer against the loss or damage of the vegetation storing the carbon.

It is seen as a big win for Queensland landholders, who will lose the right to develop their land after December 31 this year under the Beattie Government’s controversial Vegetation Management Act.

After that date, all clearing permits for remnant vegetation will expire and so too, the opportunity to sell the carbon credits from that land.

Mr Devine said, “This is the open market working in its purest form – development versus conservation – and in these cases conservation has won on a direct commercial basis without the need for the unwanted government intervention and regulation that we have seen in the past.”

“The challenge is understanding this is the sale of development rights, not the sale of the land or the use of that land.”

“In some ways it is much like an easement. You can use the area but there is an agreement as to how you can use the area.

“There is still a long way to go but we have cleared the first hurdle of exposing vegetation management to commercial reality.”

* More information: Website: www.mindingthecarbonstore.com

SOURCE: Queensland Country Life, November 16.

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